Texas oil boom
The Texas oil boom, sometimes called the gusher age, was a period of dramatic change and economic growth in the U.S. state of Texas during the early 20th century that began with the discovery of a large petroleum reserve near Beaumont, Texas. The find was unprecedented anywhere in its size and ushered in an age of rapid regional development and industrialization that has few parallels in U.S. history. Texas quickly became one of the leading oil-producing states in the U.S., along with Oklahoma and California; soon the nation overtook the Russian Empire as the top producer of petroleum. By 1940 Texas had come to dominate U.S. production. Some historians even define the beginning of the world's Oil Age as the beginning of this era in Texas.
The major petroleum strikes that began the rapid growth in petroleum exploration and speculation occurred in Southeast Texas, but soon reserves were found across Texas and wells were constructed in North Texas, East Texas, and the Permian Basin in West Texas. Although limited reserves of oil had been struck during the 19th century, the strike at Spindletop near Beaumont in 1901 gained national attention, spurring exploration and development that continued through the 1920s and beyond. Spindletop and the Joiner strike in East Texas, at the outset of the Great Depression, were the key strikes that launched this era of change in the state.
This period had a transformative effect on Texas. At the turn of the century, the state was predominantly rural with no large cities. By the end of World War II, the state was heavily industrialized, and the populations of Texas cities had broken into the top 20 nationally. The city of Houston was among the greatest beneficiaries of the boom, and the Houston area became home to the largest concentration of refineries and petrochemical plants in the world. The city grew from a small commercial center in 1900 to one of the largest cities in the United States during the decades following the era. This period, however, changed all of Texas' commercial centers.
H. Roy Cullen, H. L. Hunt, Sid W. Richardson, and Clint Murchison were the four most influential businessmen during this era. These men became among the wealthiest and most politically powerful in the state and the nation.
Timeframe
Several events in the 19th century have been regarded as a beginning of oil-related growth in Texas, one of the earliest being the opening of the Corsicana oil field in 1894. Nevertheless, most historians consider the Spindletop strike of 1901, at the time the world's most productive petroleum well ever found, to be the beginning point. This single discovery began a rapid pattern of change in Texas and brought worldwide attention to the state.By the 1940s, the Texas Railroad Commission, which had been given regulatory control of the Texas oil industry, managed to stabilize American oil production and eliminate most of the wild price swings that were common during the earlier years of the boom. Many small towns, such as Wortham, which had become boomtowns during the 1920s saw their booms end in the late 1920s and early 1930s as their local economies collapsed, resulting from their dependence on relatively limited petroleum reservoirs. As production peaked in some of these smaller fields and the Great Depression lowered demand, investors fled. In the major refining and manufacturing centers such as Beaumont, Houston, and Dallas, the boom continued to varying degrees until the end of World War II. By the end of the war, the economies of the major urban areas of the state had matured. Though Texas continued to prosper and grow, the extreme growth patterns and dramatic socioeconomic changes of the earlier years largely subsided as the cities settled into more sustainable patterns of growth. Localized booms in West Texas and other areas, however, continued to transform some small communities during the post-war period.
Background
Post-Civil War Texas
Following the American Civil War, Texas's economy began to develop rapidly centered heavily on cattle ranching and cotton farming, and later lumber. Galveston became the world's top cotton shipping port and Texas' largest commercial center. By 1890, however, Dallas had exceeded Galveston's population, and in the early 1900s the Port of Houston began to challenge Galveston's dominance.In 1900 a massive hurricane struck Galveston, destroying much of the city. That and another storm in 1915 shifted much of the focus from investors away from Galveston and toward nearby Houston, which was seen as a safer location for commercial operations. Because of these events, the coming oil boom became heavily centered on the city of Houston both as a port and a commercial center.
Though Texas had notable urban areas at the turn of the century, it was still a predominantly rural state. Texas was largely open range, meaning that livestock could freely roam throughout the state.
Early history of petroleum
In the 1850s, the process to distill kerosene from petroleum was invented by Abraham Gesner. The demand for the petroleum as a fuel for lighting around the world quickly grew. Petroleum exploration developed in many parts of the world with the Russian Empire, particularly the Branobel company in Azerbaijan, taking the lead in production by the end of the 19th century.In 1859, Edwin Drake of Pennsylvania invented a drilling process to extract oil from deep within the earth. Drake's invention is credited with giving birth to the oil industry in the U.S. The first oil refiner in the United States opened in 1861 in Western Pennsylvania, during the Pennsylvanian oil rush. Standard Oil, which had been founded by John D. Rockefeller in Ohio, became a multi-state trust and came to dominate the young petroleum industry in the U.S.
Texans knew of the oil that lay beneath the ground in the state for decades, but this was often seen more as a problem than a benefit because it hindered the digging of water wells. Rancher William Thomas Waggoner, who later became an influential oil businessman in Fort Worth, struck oil while drilling for water in 1902. He was quoted as having said, "I wanted water, and they got me oil. I tell you I was mad, mad clean through. We needed water for ourselves and for our cattle to drink."
Despite the earlier negative associations with oil among many ranchers and farmers, demand for kerosene and other petroleum derivatives drove oil prospecting in Texas after the American Civil War at known oil-producing springs and accidental finds while drilling for water. One of the first significant wells in Texas was developed near the town of Oil Springs, near Nacogdoches. The site began production in 1866. The first oilfield in Texas with a substantial economic impact was developed in 1894 near Corsicana. In 1898, the field built the state's first modern refinery. The success of the Corsicana field and increasing demand for oil worldwide led to more exploration around the state.
Mechanization
In 1879, Karl Benz was granted the first patent on a reliable gasoline-powered engine in Germany. In 1885, he produced the first true gasoline automobile, the Benz Patent Motorwagen. The new invention was quickly refined and gained popularity in Germany and France, and interest grew in the United Kingdom and the United States. In 1902, Ransom Olds created the production line concept for mass-producing lower-cost automobiles. Henry Ford soon refined the concept so that by 1914, middle-class laborers could afford automobiles built by Ford Motor Company.Automobile production exploded in the U.S. and in other nations during the 1920s. This, and the increasing use of petroleum derivatives to power factories and industrial equipment, substantially increased worldwide demand for oil.
Growth of "Big Oil"
Spindletop
After years of failed attempts to extract oil from the salt domes near Beaumont, a small enterprise known as the Gladys City Oil, Gas, and Manufacturing Company was joined in 1899 by Croatian/Austrian mechanical engineer Anthony F. Lucas, an expert in salt domes. Lucas joined the company in response to the numerous ads the company's founder Pattillo Higgins placed in industrial magazines and trade journals. Lucas and his colleagues struggled for two years to find oil at a location known as Spindletop Hill before making a strike in 1901. The new well produced approximately 100,000 barrels of oil per day, an unprecedented level of production at the time. The 1902 total annual production at Spindletop exceeded 17 million barrels. The state's total production in 1900 had been only 836,000 barrels. The overabundance of supply led oil prices in the U.S. to drop to a record low of 3 cents per barrel, less than the price of water in some areas.Beaumont almost instantly became a boomtown with investors from around the state and the nation participating in land speculation. Investment in Texas speculation in 1901 reached approximately $235 million US. The level of oil speculation in Pennsylvania and other areas of the United States was quickly surpassed by the speculation in Texas. The Lucas gusher itself was short-lived; production fell to 10,000 barrels per day by 1904. The strike, however, was only the beginning of a much larger trend.
Discoveries spread
Exploration of salt domes across the plains of the Texas Gulf Coast took off with major oil fields opening at Sour Lake in 1902, Batson in 1903, Humble in 1905, and Goose Creek in 1908. Pipelines and refineries were built throughout much of Southeast Texas, leading to substantial industrialization, particularly around Houston and the Galveston Bay. The first offshore oilfield in the state opened in 1917 at Black Duck Bay on the Goose Creek field, although serious offshore exploration did not begin until the 1930s.Initially, oil production was conducted by many small producers. The early exploration and production frenzy produced an unstable supply of oil, which often resulted in overproduction. In the early years, a few major finds led to easy availability and major drops in prices, but were followed by limited exploration and a sudden spike in prices as production dwindled. The situation led exploration to spread into the neighboring states of Oklahoma, Louisiana, and Arkansas, which competed with Texas for dominance in oil production. The Glenn Pool strike near Tulsa, Oklahoma in 1905 established Tulsa as the leading U.S. oil production center until the 1930s. Though Texas soon lagged behind Oklahoma and California, it was still a major producer.
During the late 1910s and 1920s, oil exploration and production continued to expand and stabilize. Oil production became established in North Texas, Central Texas, the Panhandle, and the Permian Basin in western Texas. The finds in North Texas, beginning with the 1917 strike in the Ranger Oil Boom west of Dallas-Fort Worth, were particularly significant, bringing substantial industrialization to the area and contributing to the war effort during World War I. Texas soon became dominant as the nation's leading oil producer. By 1940, Texas production was twice that of California, the next largest U.S. producer.